NCLAT Dismisses BHELs Attempt to Block RECs Insolvency Move Against Hiranmaye Energy

On Monday, the National Company Law Appellate Tribunal (NCLAT) dismissed a petition filed by Bharat Heavy Electricals Limited (BHEL) seeking to halt REC Limited (formerly known as Rural Electrification Corporation) from initiating insolvency proceedings against Hiranmaye Energy, formerly known as India Power Corp Haldia.

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NCLAT Finds No Reason to Interfere

The NCLAT stated that it saw no reason to interfere with the order passed by the Kolkata bench of the National Company Law Tribunal (NCLT) admitting REC's insolvency plea against Hiranmaye Energy. The tribunal held that claims filed by BHEL against the debt-ridden thermal power company should be dealt with in accordance with the law.

BHEL's Contentions

BHEL had challenged the NCLT's admission of REC's insolvency plea and the rejection of its intervention application filed as a public sector undertaking (PSU). BHEL argued that the Calcutta High Court had granted an award in its favor on May 20, 2022, which was being executed with an interim injunction from the high court. BHEL contended that admitting REC's insolvency plea under Section 7 of the Insolvency and Bankruptcy Code (IBC) as a financial creditor would prejudice its position.

NCLAT's Response

The NCLAT did not agree with BHEL's submissions. The tribunal noted that REC had filed its application under Section 7 in 2021, before the Calcutta High Court's award in favor of BHEL on May 20, 2022. The NCLAT clarified that BHEL could still file its claim in the corporate insolvency resolution process (CIRP) of Hiranmaye Energy.

BHEL's Claims Already Submitted

The NCLAT further observed that BHEL had already submitted claims before the resolution professional of Hiranmaye Energy. The tribunal dismissed both of BHEL's appeals, stating that it saw no reason to interfere with the impugned orders.

The NCLAT's decision upholds the NCLT's admission of REC's insolvency plea against Hiranmaye Energy. BHEL's claims against the company will be dealt with during the CIRP process, ensuring a fair and transparent resolution of the insolvency proceedings.